How to identify the accuracy of transparent information and how to guard against misinformation.

    The Importance of Context

The transparency of information should be considered in context. For example, data indicators and averages must provide sufficient information to understand what the data actually represents, and they must be specific enough to allow comparison with other data.

Without context, it’s easy to misinterpret information, leading to a distortion of facts. Let’s look at an example.

“I paid $3 per pound for green beans, which is three times the futures price, so I’m having a positive impact on the supply chain!” 」

This is a post shared by a roaster that the author recently saw on social media. It may have received many likes and won over some fans. But the statement provides almost no necessary context or background reference.

For example, what was the status of the coffee when the roaster purchased it? Where was it purchased from? In most coffee-producing regions, the farm gate price for unhulled green beans is $3. If the roaster bought directly from the farm, then it truly is a positive impact.

But upon further investigation, the author found that the price mentioned in the post was the FOB (Free On Board) price paid to the exporter. The FOB price includes any inland transportation costs from the factory or warehouse to the port of origin. And it does not reflect the farm gate price (the net value of the product when it leaves the farm).

Additionally, although $3 per pound for green beans is three times the futures price, the statistics shared on social media were for Costa Rican coffee, and the current commercial-grade Costa Rican coffee trades at $0.84 above the futures price. Based on the futures price of $0.93 at the time of writing, the baseline for Costa Rican coffee should be $1.77 per pound.

So $3 is not three times the baseline, but rather more than 69% higher. Of course, that’s not bad, but it doesn’t sound as good. Considering that the post was about specialty micro-lot coffee, $3 per pound is a fair price, but not above average.

Considering Who Benefits

Taking the social media post as an example, it’s important to consider that the roaster paid $3 per pound.

Does this amount also go to the importer? The roaster has to pay the importer more so that the importer can pay the exporter more, who can then pay the farmer more. But not every player passes the ball along. Therefore, when a roaster pays a price above average, it’s a good first step, but it shouldn’t be interpreted as creating a positive social impact or practicing economic justice.

Does the roaster pay the exporter? Similarly, this is a step in the right direction, but it doesn’t necessarily mean the supply chain is ethical. The exporter may or may not know—or record—how much the farmer receives. The exporter may or may not share that information with the roaster, so it’s impossible to know how much the farmer gets.

There is nothing inherently wrong with paying importers and exporters. Working with these two roles is the most efficient way to get coffee from farmers, and thus, ultimately, the method that maximizes profits for farmers.

But without transparency on the prices paid in each transaction, claims of ethical behavior or positive social impact are unjustified. It’s a bit like boasting that you recycle and care for the environment, only to find out that nothing is actually being reused and everything is disposed of at the backend. Yes, you did your part, but it had no real impact.

    Direct Farmer-Roaster Connections Aren’t Necessarily the Most Efficient

Let’s assume the roaster paid the farmer $3 directly, but this also raises some questions. How did the roaster handle the transaction with the farmer? What form of coffee did the roaster buy: Hulled green beans or fruit? Did the farmer have to bear costs for harvesting and logistics? Was the farmer’s payment made in a lump sum? How far in advance did the roaster commit to purchasing the coffee before delivery?

Let’s explore these issues in more detail.

Having Farmers Handle FOB Exports and Purchases

Buying coffee directly from farmers may be the method that gives farmers the highest income. But handling export operations, securing financing, producing enough coffee for export, and waiting for buyers to pay are complicated processes that small farmers cannot easily afford. While supporting this level of farmer and helping them increase their income isn’t a bad thing, it doesn’t lift anyone out of poverty, and claiming it creates a positive social impact is somewhat inaccurate.

Farmers using this method may receive a higher price than through intermediaries, but they also spend a lot of time and money getting the product to FOB, so they may actually end up with less profit. You can’t compare this price to the farm gate price because the gate price doesn’t include any packaging or logistics costs.

Is a higher proportion of what you pay going to the farmer? Do they spend $1 per pound on logistics and end up with $0.20 in profit? Or do they hand the business to an exporter who spends $0.30 on logistics, the exporter takes $0.20, and the farmer gets $0.70 in profit? Is the goal to trade directly with producers, or to use the method that provides them with the fairest income?

Trading Hulled Green Beans or Fruit

When discussing prices, it’s important to understand what kind of coffee you’re buying and selling. Depending on quality and other factors, clean green beans make up about 70–80% of the weight of hulled green beans. Therefore, when we discuss how much is paid to the farmer for a pound of green beans, it can vary based on the type of coffee chosen, such as screening mechanisms, defects, etc.

In another social media post, an importer claimed to have paid Colombian farmers 1 million Colombian pesos for each carga (about 275 pounds) of fruit (approximately 9,700 Taiwanese dollars). Sharing such a number might seem admirable, but how many roasters understand whether it’s a good price? The statement is actually complex and unclear, even for those familiar with Colombian currency and local coffee terminology.

First, a carga is about 125 kilograms. In the coffee industry, this unit of measurement is usually used for hulled green beans, whether sun-dried or washed. But the post also mentioned fruit. Was this payment for all 125 kilograms of fresh fruit? If so, the price of green beans would be over $7 per pound, which is a very good price for farmers.

In the comments of the post, someone asked for a clearer explanation. It turned out that the price the farmer received, after removing the outer weight, was $5.13 per pound, calculated based on the conversion from fruit to hulled green bean weight.

Therefore, although the fruit was purchased locally by the importer, the price they shared was reasonably converted from fruit to hulled green bean weight. But who could tell that from the post? Did the importer want people to understand it? Or was it just to share the number for attention? However, based on local purchase prices, it’s still a very good price.

Then, there’s the issue of currency exchange. At the time of writing, 1 US dollar is equivalent to about 3,250 Colombian pesos. Exchange rates affect transactions, but in the short term, the local cost of living remains relatively consistent. Therefore, when coffee is sold, the farmer’s quality of life is greatly related to the selling price. Most of us understand this and can calculate the result effortlessly, but how many people pay attention to this issue while scrolling through their phones?

Generally speaking, if a company publishes information, it must be ethical, positive, and honest. But before concluding that a company is creating meaningful social impact, the information and data should be carefully analyzed.